Jobs and the Future of Work

Why education is essential for growth

Kevin Watkins
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Some 236 years ago, a young governor from the American state of Virginia broke the mold on education reform. In his Bill for the More General Diffusion of KnowledgeThomas Jefferson called for “a system of general instruction” that would reach all citizens, “from the richest to poorest.” It was the first step in the creation of the American system of public education – an institution that helped to propel the country’s rise to global prominence.

By the early twentieth century, the United States was a global leader in public schooling. Investments in education provided a catalyst for economic growth, job creation, and increased social mobility. As Claudia Goldin and Lawrence Katz have shown, it was American “exceptionalism” in education that enabled the country to steal a march on European countries that were under-investing in human capital.

As world leaders gather this week for the Oslo Summit on Education for Development, the lessons from this experience could not be more relevant. In fact, with the global economy becoming increasingly knowledge-based, the education and skills of a country’s people are more important than ever in securing its future. Countries that fail to build inclusive education systems face the prospect of sluggish growth, rising inequality, and lost opportunities in world trade.

In this context, some of today’s discussions on education sound curiously anachronistic. Harvard economist Ricardo Hausmann recently berated what he describes as the “education, education, education crowd” for advocating an “education-only” strategy for growth. It was an impressive attack on a view that, to the best of my knowledge, nobody holds.

Of course education is not an automatic route to growth. Expanding education in countries where institutional failure, poor governance, and macro-economic mismanagement stymie investment is a prescription for low productivity and high unemployment. In North Africa, the disharmony between the education system and the job market left young, educated people without decent opportunities – a situation that contributed to the revolutions of the Arab Spring.

None of this detracts from the vital role of education – not just years of schooling, but genuine learning – as an essential component of growth. Extensive research – from the work of Adam Smith to Robert Solow and Gary Becker and, most recently, Eric Hanushek – confirms the importance of learning in building productive human capital. One step up the standard deviation score on the OECD’s Program for International Student Assessment is associated with a 2% increase in a country’s long-run per capita growth rate.

Education may not be a quick fix for slow growth. But try naming a country that has sustained an economic transformation without advances in education.

Economists at the World Bank have contributed a few straw men of their own to the education debate. In one contribution, Shanta Devarajan criticizes the view that education is an essential public good that governments should finance and deliver, arguing that it should instead be considered a private good, delivered through markets to customers – that is, parents and children – seeking private returns.

The problem is that education is self-evidently not a public good – in the real world, few things are. It is, however, a “merit” good, something that governments should offer for free, because of the wide-ranging private and social returns that might be lost if parents underinvest, or if the poor are excluded. For example, progress in education – especially girls’ education – is closely associated with improvements in child survival and nutrition, and maternal health, as well as higher wages.

It is time to move beyond futile discussions based on flawed logic to focus on the real challenges in education – challenges that must be addressed, if we are to meet the Sustainable Development Goal of delivering high-quality primary and secondary education to all by 2030. The Oslo summit presents an important opportunity to lay the groundwork for success. With 59 million primary school-age children and 65 million adolescents out of school, that opportunity should be seized with both hands.

A successful summit would advance four key imperatives. First, governments must commit more domestic funds to education. One background paper for the summit highlights the failure of successive governments in Pakistan, which now has the world’s second-largest out-of-school population, to invest in education. At the heart of the problem are politicians who are more interested in facilitating tax evasion by the wealthy than improving learning opportunities for the poor.

Second, international donors must reverse the downward trend in aid for education. Even with an enhanced resource-mobilization effort, roughly $22 billion annually in aid will be needed to achieve universal lower-secondary education. That is around five times current levels. Beyond closing the aid gap, United Nations Special Envoy on Education Gordon Brown has rightly called for financing mechanisms to deliver education to children affected by conflict and humanitarian emergencies.

Third, world leaders must get serious about inequality. Every government should be setting targets aimed explicitly at narrowing education disparities – linked to gender, wealth, and the rural-urban divide – and aligning their budgets with those targets. As it stands, the disparities are huge. In Nigeria, for example, urban boys from the wealthiest 20% of households average ten years of schooling, while poor rural girls in northern areas can expect less than two years. Yet, as another Oslo summit background paper shows, education finance is skewed toward the wealthy in most countries.

Finally, governments and aid agencies must abandon market-based experiments, and commit to genuine system-wide reform. One key priority area is teachers, who need strong incentives, effective training, and dependable support systems to deliver real learning. After all, an education system is only as good as its educators.

As world leaders gather in Oslo, millions of parents will be struggling to ensure that their children receive the education they deserve – one that will enable them to build better lives for themselves and their families. For these parents, schooling is a source of hope. We owe them and their children our best efforts.

This article is published in collaboration with Project Syndicate. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Kevin Watkins is Director of the Overseas Development Institute (ODI), a leading UK think tank on international development and humanitarian issues.

Image: Coloured pencils are pictured in a wooden box at a nursery school. REUTERS/Michaela Rehle.

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Related topics:
Jobs and the Future of WorkEducation and SkillsEconomic Growth
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